Exercise 7-14 (Algo) Comparison of Projects Using Net Present Value [LO7-2] Labeau Products, Limited, of Perth, Australia, has $25,000 to invest. The company is trying to decide between two alternative uses for the funds as follows: Investment required Annual cash inflows Invest in Project X $ 25,000 $8,000 Single cash inflow at the end of 6 years. Life of the project The company's discount rate is 16%. Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project X. 2. Compute the net present value of Project Y. 3. Which project would you recommend the company accept? Required 1 Required 2 Required 3 Complete this question by entering your answers in the tabs below. 6 years Invest in Project Y $ 25,000 6 years
Exercise 7-14 (Algo) Comparison of Projects Using Net Present Value [LO7-2] Labeau Products, Limited, of Perth, Australia, has $25,000 to invest. The company is trying to decide between two alternative uses for the funds as follows: Investment required Annual cash inflows Invest in Project X $ 25,000 $8,000 Single cash inflow at the end of 6 years. Life of the project The company's discount rate is 16%. Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project X. 2. Compute the net present value of Project Y. 3. Which project would you recommend the company accept? Required 1 Required 2 Required 3 Complete this question by entering your answers in the tabs below. 6 years Invest in Project Y $ 25,000 6 years
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![Exercise 7-14 (Algo) Comparison of Projects Using Net Present Value [LO7-2]
Labeau Products, Limited, of Perth, Australia, has $25,000 to invest. The company is trying to decide between two alternative uses for
the funds as follows:
Investment required.
Annual cash inflows.
Single cash inflow at the end of 6 years
Life of the project
The company's discount rate is 16%.
Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using tables.
Required:
1. Compute the net present value of Project X.
2. Compute the net present value of Project Y.
3. Which project would you recommend the company accept?
Invest in Project X
$ 25,000
$ 8,000
Required 1
Complete this question by entering your answers in the tabs below.
Required 2 Required 3
Net present value
6 years
Invest in Project Y
$ 25,000
Required 1
$ 60,000
Compute the net present value of Project X.
Note: Negative amounts should be indicated by a minus sign. Round your final answer to the nearest whole dollar amount.
Required 2 >
6 years](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa12342b4-a990-4b53-b38f-11562f42e6a8%2Fc83cdb77-0641-4b7d-a947-959a9d4f5cf6%2Fo2b4nwq_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 7-14 (Algo) Comparison of Projects Using Net Present Value [LO7-2]
Labeau Products, Limited, of Perth, Australia, has $25,000 to invest. The company is trying to decide between two alternative uses for
the funds as follows:
Investment required.
Annual cash inflows.
Single cash inflow at the end of 6 years
Life of the project
The company's discount rate is 16%.
Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using tables.
Required:
1. Compute the net present value of Project X.
2. Compute the net present value of Project Y.
3. Which project would you recommend the company accept?
Invest in Project X
$ 25,000
$ 8,000
Required 1
Complete this question by entering your answers in the tabs below.
Required 2 Required 3
Net present value
6 years
Invest in Project Y
$ 25,000
Required 1
$ 60,000
Compute the net present value of Project X.
Note: Negative amounts should be indicated by a minus sign. Round your final answer to the nearest whole dollar amount.
Required 2 >
6 years
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